(Reuters) – The US Securities and Exchange Commission is investigating Deutsche Bank's asset manager DWS on how it used sustainable investment criteria to manage its assets, said two people with knowledge of the issue.
The news was first reported by The Wall Street Journal, sending DWS shares down nearly 13% in morning trading.
The two people spoke to Reuters on condition of anonymity because they were not authorized to discuss ongoing investigations. DWS and Deutsche Bank declined to comment.
If it progresses, the case will be closely monitored by the asset management industry.
Fund managers have rapidly amassed billions of dollars in assets that are designed to have an environmental or social profile, but are facing growing scrutiny of how companies define and apply environmental, social and governance standards.
The SEC inquiry follows a report earlier this month, also by The Wall Street Journal, referring to the former head of sustainability at DWS who says the investment firm overestimated how it used sustainable investment criteria to manage investments.
The former boss, who could not be directly reached for comment, left DWS earlier this year after less than a year in the job.
A spokesman for the SEC said: "The SEC does not comment on the existence or non-existence of a possible investigation."
The WSJ, citing unnamed sources, also reported that federal prosecutors in Brooklyn, New York, were investigating the case.
A spokesman for the US Department of Justice declined to comment on the WSJ report.
Deutsche Bank, which has expanded its sustainable lending business, has also sought to restore its image in Washington among several investigations into its dealings with Donald Trump, a longtime customer.
DWS is the second German fund manager to face US regulatory control.
Allianz SE is also facing DOJ and SEC losses investigations last year at its fund division, Allianz Global Investors. Catalog